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Over my years as a member of the KOSSAK community I have come to recognize that we represent a large cross-section of well informed, smart, educated folks.  While I have been involved in years and years of work-related and non-work-related internet research; I often come to dead ends.

I am in a situation where my daughter is in default of student loans taken out through MyRichUncle and Sun Trust Bank all apparently now managed by American Educational Services. My daughter is an hourly worker making barely above minimum wage with a maximum take home salary of $250 to $300 per week. I am aware she is part of an epidemic in student loan defaults but there is one major extenuating circumstance.  See why below

My ex wife and I divorced in 1999. While I paid child support up until she reached 19; there was no formal legal mention of financial obligations beyond that time. When my daughter started at the state public university; my ex and I agreed to fund every other year of her education.

I was fortunate to be able to fund with cash and one short-term loan my two years (~40K total) plus purchase her a vehicle. My ex decided to take out student loans for my daughter for her share.  My ex made all the contracts, did all the paperwork, co-signed, received the funds and distributed them to my daughter on an as needed basis.

Her promise to our daughter was that she would make the payments so she would not start life with a huge debt over her head. So far she has not paid back the first penny.

In addition, we have found out that my ex took out student loans that exceeded the amount sent my daughter and the university by about $25,000.  She has defrauded the lenders and also jeopardized my daughter’s future.

I urged my daughter to inform the authorities immediately but she wanted to protect her Mom. However, now after be harassed at work today by a collection agency she wants to take action.

For those of you who may have some expertise or experience in this area; here are my most pressing questions:

•    Is there a good, honest, reliable, and preferably non-profit, source for information on student loan repayment problem situations that does not end up putting the student deeper in debt?

•    Since these are not federal but private student loans does the Office of the Inspector General in the U.S. Department of Education have a role here? (I was directed here when Googling student loan fraud.)

•    My ex and at least one lender is in the State of Florida. Should I contact the Florida State Attorney General’s office?

My daughter and I realize she has an obligation here to pay for her education.  The amount was unexpected.

My ex made a verbal commitment which is probably uneforceable. However, she stole loan proceeds and has a liability as the co-signatory. We want her held responsible for her fair share.

She has turned her back on my daughter and will not discuss the situation at all. It looks like at a minimum we may to report her fraud just to get her attentioin.

Any direction and advice would be greatly appreciated.

Education, student loans, student financial assistance, fraud, loan default  

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Comment Preferences

  •  Ugh I hope you find someone who can help. I'll (1+ / 0-)
    Recommended by:
    cazcee

    add a comment here so perhaps people will stop by.

  •  I can't help you but (1+ / 0-)
    Recommended by:
    cazcee

    I wish you good luck.  

  •  I don't know either (1+ / 0-)
    Recommended by:
    cazcee

    I too will post a comment hoping someone can...

  •  You might want to try getting advice from a lawyer (10+ / 0-)

    And seeing if it's even possible for your daughter to sue your ex for fraud. If the loans are in your daughter's name though I'm not sure there's much you can do. Wow how does someone do that to their own daughter?

  •  First of all, don't panic. (6+ / 0-)

    You're going to need a lawyer, as I see it.
    Hang in there, don't let it dominate your lives. Just hang in there and document your case.

    You can't make this stuff up.

    by David54 on Thu Nov 08, 2012 at 04:17:49 PM PST

    •  Legal fees expended... (0+ / 0-)

      won't be recoverable, and will just add to the expense of the situation.  Unless mom has assets, which doesn't sound likely, spending $5-10k only to collect nothing will only be a waste of money.  Even if mom has a salary, she's likely to change jobs to thwart collection efforts.  (Actual collection efforts come with their own costs (several hundred dollars per attempt), which are recoverable but only if money is actually seized which is sufficient to repay them.)

      Daughter can sue on the oral contract in Small Claims Court up to the Court's limit, but collectability is still the crux of the problem, even if mom defaults and fails to answer the complaint.  (Daughter will also need at least one witness as to the agreement as her word alone will not be legally sufficient.)

      Daughter can possibly deduct the value of the non-business bad debt on her taxes, but her low income probably means that won't be worth much of anything.

      There doesn't appear to be any satisfying path for daughter to take other than the possibility of having mom jailed for fraud, but that won't pay any bills or help her credit score.

      "Two things are infinite: the universe and human stupidity, and I am not sure about the universe." -- Albert Einstein

      by Neuroptimalian on Fri Nov 09, 2012 at 12:39:37 AM PST

      [ Parent ]

      •  When I was in grad school last time, I had need of (0+ / 0-)

        a little legal advice, and there was a lawyer available for student advice. No charge. That's more in line with what I was thinking.

        You can't make this stuff up.

        by David54 on Fri Nov 09, 2012 at 06:31:10 AM PST

        [ Parent ]

  •  Not to delve into your family affairs but (2+ / 0-)
    Recommended by:
    ItsSimpleSimon, cazcee

    she has a legal action against her mom.  Not likely to get out of co-signed loans, but if this was mom's agreed obligation to her . . . . Seek legal help asap.

    "To recognize error, to cut losses, to alter course, is the most repugnant option in government." Historian Barbara Tuchman

    by Publius2008 on Thu Nov 08, 2012 at 04:22:37 PM PST

  •  joint debts suck (4+ / 0-)
    Recommended by:
    Odysseus, cazcee, Catte Nappe, big annie

    I'm sorry...shitty thing for a mom to do, shitty thing for a kid to have lose faith in a parent.  Good luck and I hope you find help.

    Maybe change the title to plead for some free legal advice concerning student loans.  Plenty of lawyers on this site.  

    If I were you I'd do some conference calling with you and your daughter talking directly to the lenders to find out what your options are.  At least that'd be a place to start.

    But I, being poor, have only my dreams; I have laid my dreams under your feet; tread softly, because you tread on my dreams. – Yeats

    by Bill O Rights on Thu Nov 08, 2012 at 04:23:07 PM PST

  •  How is the Florida Attorney General (2+ / 0-)
    Recommended by:
    cazcee, eyesoars

    re:  consumer issues?  I know ours here in Minnesota is (and historically has been) fabulous and extremely helpful in a wide range of ways, but . . . I don't know enough about Florida to know how the job's been defined there.  That may be a place to start.

    Those d*$#'d privatized student loans are some toxic stuff -- I know Obama has/had some plans to ameliorate them, but . . . aargh.  I suspect you and your daugher will have to burn up the phone lines with calls to legal aid and eleced officials until you, hopefully, find someone who can help.  Any local social services agencies that could point you to debt counselors?  Hell, maybe you should try contacting Mike Papantonio (sp.) of Ring of Fire -- he's a Floridian and perhaps his firm if not him, himself, could point you to a credit counselor.

  •  You will need a lawyer... (6+ / 0-)

    There are many kinds and unfortunately, I don't know all the different types of lawyers. I do not think a bankruptcy lawyer will be effective in your case if bankruptcies is all they do.

    You might want to ask your divorce lawyer if he or she knows anyone who would be able help you. You need the lawyer bad because the lawyer can talk to the bank and other parties for you with the appropriate (legal) language.

    Depending on where your daughter goes to school, there may be legal services available (UCLA and UMich does). Else, go to the financial aid office and see if they know any good lawyers or have any advice.

    Next, you need to ignore/block any and all calls by the collection agency. As long as they can get you to admit to paying up or doing something wrong, they win and will tack on all sorts of things to make your already existing miserable pile of debt even more miserable.

    Push a button and it goes "Ding!"

    by Future Gazer on Thu Nov 08, 2012 at 04:30:59 PM PST

    •  seconding this (5+ / 0-)

      From your description, your ex engaged in fraud.  It's not bankruptcy - and you need a lawyer.  

      Admit nothing to no one - seriously - your adversaries' lawyers will not hesitate to use it.

      If the university has a law school, that can be a good place to start as well.

    •  I agree about collection agencies. I had some (2+ / 0-)
      Recommended by:
      cazcee, peregrine kate

      after me when I was a college student (refused to pay rent on an apartment in which the door had been kicked in by a burglar and the landlord kept putting off fixing).
      And after our son's illness, when the insurance companies were fighting about who had to pay, we started getting collection agencies trying to get the money from us instead.
      When I had the problem as a college student, my cousin who was a real estate agent told me to completely ignore the collection agencies, that they had no real power to hurt me in any way. So that's what we did.
      And I did the same after my son's illness.
      My understanding is that they get a % of everything they collect, but they don't have any real authority over the victims of their calls.

      We're not perfect, but they're nuts! -- Barney Frank

      by Tamar on Thu Nov 08, 2012 at 04:40:54 PM PST

      [ Parent ]

      •  Be careful. (4+ / 0-)
        Recommended by:
        Tamar, Gordon20024, cazcee, Catte Nappe

        If the collector owes the loan and it is a lot of money they will sue.  My understanding is there is no bankruptcy out and no statute of limitations (SOL) on student loans--BUT CHECK WITH AN ATTY ON THAT.  This is from 1999.  If there is a SOL, it probably applies in your state.

        Never, ever, ignore a summons to appear in court because it's as a communication from a debt collector.  They will take your daughter's default and she will automatically lose and then be subject to garnishment , etc.

        If they sue, your daughter needs, unfortunately, to file a "cross-complaint" against her mom--if the facts are as you say they are.

        "To recognize error, to cut losses, to alter course, is the most repugnant option in government." Historian Barbara Tuchman

        by Publius2008 on Thu Nov 08, 2012 at 04:47:19 PM PST

        [ Parent ]

    •  Yes, school financial aid office (7+ / 0-)

      Definitely talk with them about the situation. I can GUARANTEE they have had other students in this situation and someone there may have information to help, what her rights are, etc. and perhaps names of lawyers or info on what kinds of lawyer she might need. They might also have strategy advice.

      My husband is a research scientist at a public university and he has done a lot of trouble shooting for his students--sometimes problems when they transfer, etc. and he speaks very highly of the people he's worked with in financial aid offices. Sometimes they can do something to straighten out a problem that you or even a lawyer might not think of. So, talk with them as much as you can.

      Get a lawyer, soon.

      I love it that Obama's channeling Harry Truman: "I don't give 'em hell; I just tell the truth and they think it's hell!"

      by sillia on Thu Nov 08, 2012 at 04:50:25 PM PST

      [ Parent ]

  •  Go to the department of ed (7+ / 0-)

    directly, talk to a ombudsmen. Also try to consolidate the loans directly through the department of ed. Ask for an income dependent payback plan. Been through this the ombudsmen work well.

    For today August 9 I found a signature. I am a badger in heart today. Fight on Wisconsin.

    by the mom in the middle on Thu Nov 08, 2012 at 04:40:21 PM PST

  •  A couple thoughts (6+ / 0-)

    A Parent Plus loan should have been taken out entirely in your ex's name; your daughter would have no obligation to repay a cent.  In addition, your ex would have committed fraud and should be reported to the authorities (not sure off the top of my head if that'd be a state or federal matter, but a "quick" contact with the state AG could point you in the direction of what you need to do).

    If this was something else that your daughter actually cosigned, then it's really going to matter on the details.  Gather every scrap of information you can and contact a lawyer who has some expertise in this area.  If you know someone who works in the legal field, ask them who they'd trust.  If not, contact a couple lawyers to get their take on things; you can typically get at least a first glance without paying anything, and the good ones will suggest what steps you can take even in absence of hiring them.

    Lastly, I know from personal experience that AES isn't quite the devil.  Explain the situation to them and see what options are on the table.  Going into default makes things messier, but it's still worth exploring that avenue.  They'd much rather get your ex in the cross-hairs to repay and ignore your daughter all together if they can; so they do have incentive to help you.

  •  Not sure, but... (1+ / 0-)
    Recommended by:
    cazcee

    Possibly the Financial Aid people at your daughter's school will have some ideas where you can get help?

    And you could possibly file against your wife in civil court?

    Your divorce lawyer might also be able to steer you.

    Good luck!  Don't just lay down and give up on this--but keep plugging.  

    Stubbornness and persistence are your friends.

  •  I just have to comment that your daughter's (3+ / 0-)

    mother really sounds awful.
    When my daughter started looking into loans for grad school, I refused to let her take out anything other than the federal (Stafford) loans. Federal loans have repayment options that can be geared to the borrower's income. We told her we'd help her out as much as possible and encouraged her to find part time work (she has work study right now) rather than taking out loans beyond the federal amount she was allowed.
    The private, non-federal loans are suspect IMHO. The fact that your ex not only sucked her into getting those loans but also kept some of the money herself is despicable.
    Our babysitter, who is not high income (though we have always tried to pay her a good salary), sacrificed a great deal to protect her daughter from having to borrow too much for college.

    We're not perfect, but they're nuts! -- Barney Frank

    by Tamar on Thu Nov 08, 2012 at 04:48:32 PM PST

  •  You need a Florida lawyer. (2+ / 0-)
    Recommended by:
    cazcee, the mom in the middle

    From your facts, it seems that your daughter likelyhas a cause of action for fraud directly against your ex.  A Floriday lawyer may be able to get a judge to attach (in effect, seize) your ex's personal property in order to satisfy at least part of the loan amount.  But get a lawyer to confirm.

    The road to Hell is paved with pragmatism.

    by TheOrchid on Thu Nov 08, 2012 at 04:51:53 PM PST

  •  A few suggestions, but first a caveat: (5+ / 0-)

    I am not an attorney, I'm not a financial aid counselor at a college or university, and I don't work at a bank.  I don't even manage my own money well.

    1) You need an attorney to help you sort out the issues.  There are potential issues of jurisdiction here--the state in which your daughter currently resides, the state in which your ex-wife resides, the state in which your daughter went to school--so you'll have to work with someone who can address these complex questions.

    2) You say that you and your ex each agreed to fund every-other year of college.  Was this part of the divorce decree or was it a simple agreement?  If it was a simple agreement and not part of the divorce decree, do you have any documentation--not necessarily a legally-executed agreement--that will prove that?  Are there e-mails, letters, anything like that, which will reference this arrangement?

    3) You will need to get a record of payments to the university during the years for which your ex took out the loans.  You need to know what monies were paid by your ex when.  Your daughter also needs to find a way to document the monies she personally received from your ex-wife for living expenses and the like.  In other words, you need to document the discrepancy between what was borrowed and what was paid in benefit of your daughter.  To put it bluntly, you have to document your ex-wife's theft.  Although this will be difficult, it will be necessary.  You might as well start this process now, because it will likely be time consuming.  That said, I bet, if this turns legal, there will be some type of discovery.  Any information your daughter and you can provide on your own when first meeting with an attorney will be helpful.

    4) I repeat: You need to get an attorney.   Which sounds counter-intuitive, I know, since the issue is not having money.  But you need some muscle and experience behind you and, in this situation, both of those come from sage legal counsel.

    Good luck!

  •  Consolidation Option (2+ / 0-)
    Recommended by:
    cazcee, ProfessorWho

    Your daughter may also be able to consolidate her student loans to reduce current monthly payments. I would start with the federal Direct Loans program to explore that option.

  •  Tell her not to sign anything until she has talked (5+ / 0-)

    to an attorney! If she is approached about rolling all the loans into one, she may waive some defenses (such as the fraud by her mother) in any collection litigation if she agrees to a consolidation. If she is contacted again at work, have her tell the caller to stop calling her at work. (The following is from the CFPB site).

    A debt collector may not contact the consumer at his or her place of employment if the collector has reason to believe the employer prohibits such communications.

    If the debt collector knows the consumer has retained an attorney to handle the debt, and can easily ascertain the attorney’s name and address, all contacts must be with that attorney, unless the attorney is unresponsive or agrees to allow direct communication with the consumer.

    Contact the local and state bar associations to see if someone will help her "pro bono."
  •  I knew I could count on the KOSSAKs.............. (5+ / 0-)

    for a lot of great suggestions. I thank you all who have offered ideas so far.  

    I am going to change the title tomorrow and repost. We will definitely be contacting the financial aid office at the university. I am probably going to go on and contact the U.S. Dept of Ed. They may not have jurisdiction but it costs nothing to tell their Inspector General our story. I am shopping the internet for lawyers but will wait until we get suggestions from the university before taking one on.

    The mass of men lead lives of quiet desperation--HDT

    by cazcee on Thu Nov 08, 2012 at 05:14:00 PM PST

    •  I am really sorry about your daughter's (1+ / 0-)
      Recommended by:
      peregrine kate

      ... situation, but so glad she's got a caring dad to help.

      I think, however, you need a lawyer ASAP. I have this sinking feeling your daughter took out private loans instead of federal, in which case she's got a load of trouble.

      Your first step should be to contact the school's financial aid office. If it's a for-profit school, they will be useless, at best, but if it's a public or private non-profit, they might be able to advise you where to turn next.

      I would also talk to the department of ed, even though they might not be able to do much either---they might, however, know where you should go next. Here's the link: http://www.direct.ed.gov/    

      And get a lawyer. This stinks of private loans. You'll need the lawyer if they are private---but even if they are federal loans, you'll need the lawyer to go after your daughter's mom ... which you have to do.

      Good luck. Really.

    •  They're private loans (1+ / 0-)
      Recommended by:
      Catte Nappe

      I just googled myrichuncle and Sun Trust---they're private loans. The school your daughter went to should never have allowed her to take them, especially in that amount.

      I don't think the Dept of Ed can do a damn thing, but tell them anyway. And call the school. If it's a for-profit, do a search on your local court records to see if they've been involved in any kind of fraud cases---and tell your state Board of Regents or whatever the higher ed governing agency is called in your state.

      Get a lawyer. Now.

      Damn.

  •  Contact the new federal CFPB (0+ / 0-)

    Consumer Financial Protection Bureau.

    http://www.consumerfinance.gov/

    Start there.

    "Compassion is not weakness, and concern for the unfortunate is not socialism." - Hubert Humphrey

    by Killer of Sacred Cows on Thu Nov 08, 2012 at 05:58:49 PM PST

  •  That's a crazy problem (0+ / 0-)

    So A helps B take out a loan, cosigned by A and B, and you have (1) A promises to pay the loan but doesn't, and (2) A borrowed more and kept the extra money, now owed by B.

    I guess a lawyer needs to answer two questions.  First, to what extent is this actionable, and to what extent can B be protected from creditors?  

    Second, is this unique because student loans are involved?  If A committed this fraud with a personal loan instead of a student loan, would the legal picture be any different?

    I'm afraid of even asking this question in such a screwed up situation, but what about bankruptcy?  Contrary to popular belief, student loans can be discharged in bankruptcy if it can be successfully argued that the loans constitute an undue burden.  

    It seems that if someone took out $25K in your name and walked away with it, essentially defrauding you of money, then there has to be some avenue to address that in bankruptcy court.

    Taking jokes seriously is the exact mirror activity of laughing if someone says they have cancer. --jbou

    by Caj on Fri Nov 09, 2012 at 10:09:15 AM PST

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